The Facts about Eyelid Cleansers – Contrasting OCuSOFT and NovaBay

The following document has been provided by OCuSOFT for your consideration.  It serves as their reasoned response to my recent investment thesis on NovaBay dated, April 20th 2015.  It includes  what I believe to be important rebuttals to some of the assertions made by NovaBay management and key opinion leaders.  As you well know, our due diligence with respect to the equities we invest in is ongoing and ever incomplete.  A fuller picture is provided here.

The Facts about Eyelid Cleansers—Contrasting OCuSOFT and NovaBay

Recently

A lot has been written of late regarding eyelid hygiene and eyelid treatment options.  The majority of this attention has been directed to OCuSOFT Inc., the market leader and a new entry, NovaBay Pharmaceuticals.  NovaBay has introduced a 0.01% Hypochlorous acid Rx formulation in contrast to OCuSOFT’s family of OTC cleansers including OCuSOFT’s own Hypochlorous acid in a 0.02% concentration.  With so much hype going on, it’s important to get the facts straight.

Background

OCuSOFT Inc. is a privately-held eye and skin care company with an established reputation for innovation in eyelid hygiene.  Recognized as the market leader and #1 recommended by eye doctors, OCuSOFT® Lid Scrub® Eyelid Cleansers are intended for daily use and are available in pre-moistened pads or foam pump dispensers for easy application.  Their mild, non-irritating formulations are 16X milder than baby shampoo (which was the standard of care until OCuSOFT).  OCuSOFT® Lid Scrub® Original Formula is a surfactant based cleanser intended to be used on the outer eyelid and lid margins and works by removing excessive oil, debris, and desquamated skin from the eyelids.  OCuSOFT® Lid Scrub®  PLUS offers proven antibacterial properties—killing in as little as 60 seconds!  It is important to note, however, that the time kill rate for bacteria is actually less important to patient treatment than convenience and compliance.  Oral antibiotics for example are taken for 5-10 days so whether its seconds or hours, is of little importance to the clinician.  What is important is whether they are 1) Effective; 2) Economical; 3) Convenient.

Effectiveness, cost and convenience are the barometers by which patient satisfaction is measured.  The reality is healthcare costs have risen to a level where patients often have to prioritize pharma treatments.  This article seeks to clarify misstatements made in the recent press along with critical omissions.  Consider then the relationship between surfactant cleansers and Hypochlorous Acid (HOCL) products.

As mentioned, NovaBay Pharmaceuticals is now offering an eyelid cleanser, Avenova™, which utilizes HOCL in a 0.01% concentration.  OCuSOFT is now offering HypoChlor™ in a 0.02% concentration of HOCL.  Avenova™ is marketed as “pure” and proceeds to differentiate its HOCL from other HOCL (there are many) products—including OCuSOFT.  The problem is the Food and Drug Administration (FDA) makes no such distinction.

Hypochlorous Acid OTC vs. Rx Claims—Understanding the Difference

The FDA requires that Hypochlorous acid is registered as a medical device which may be marketed by the filing company as either a prescription (Rx) or OTC product.  The basis of Rx vs. OTC relies on the claims that can be made of the product as contrasted with ingredient concentration.  More specific claims can be made if the product is marketed as an Rx (“… for use under the supervision of healthcare professionals…; for moistening absorbent wound dressings and cleaning minor cuts, minor burns…” etc.) however, more general claims are made if the product is OTC (“…immediate care of minor cuts, minor scrapes and minor burns.”)  Generally speaking, the Rx vs. OTC has nothing to do with percentage of principle ingredient.  For example, OCuSOFT® HypoChlorSolution and OCuSOFT® HypoChlor Gel both contain 0.02% Hypochlorous acid and are OTC.  Other company’s brands are available at lower strengths than OCuSOFT® HypoChlor yet one may be Rx and yet another OTC.

Consider the statement made from an earlier post when referencing OCuSOFT’s Hypochlor™: The problem with this is three-fold. First, a product that contains .02% hypochlorous acid is comparable in name only. The impurities found in such formulations (Avenova™ is a special NeutroPhase™ spinoff of 100% pure hypochlorous acid) are often irritating to the eye. So while this makes for a nice headline it doesn’t make for a better product. Yes, it too attacks microbial invaders but to what extent and how fast is left to our imagination. Most importantly, OCuSOFT’s Hypochlor™ can’t be labeled, and is not, prescription grade.”    The statement referring to other HOCL products as “often irritating to the eye” is factually incorrect as HypoChlor™ was tested for use directly in the eye and received a “0” perfect non-irritating score.  It should be noted that all these HOCL products are intended for use ON the eyelid…not in the eye, however, in the case of inadvertent spillage into the eye(s), it is comforting to know Hypochlorous acids are non-irritating to the eye.

OCuSOFT® Lid Scrub® Original & PLUS Formulas Needed to Remove Oil and Debris

OCuSOFT® Lid Scrub® Original and OCuSOFT® Lid Scrub® PLUS are effective and intended for continuous daily eyelid hygiene use.  The root cause of anterior blepharitis is the overproduction of oils.  Mild surfactants in OCuSOFT® Lid Scrub® eyelid cleansers act to dissolve and remove oil, debris and desquamated skin.  Hypochlorous acid formulas do not contain these surfactants and thus are largely ineffective in debriding the oil, scales and debris often associated with eyelid irritations.  Accordingly, in the most severe cases where Hypochlorous acid might be most beneficial, it is suggested to use Combination Therapy including both a surfactant cleanser and Hypochlorous acid to achieve optimum results.  In the article, “Alternative Products Available to Combat Ocular Surface Disease” that ran in the November 2014 issue of Primary Care Optometry News,  Katherine Mastrota, O.D., a consultant for NovaBay herself, recommends pairing a hypochlorous acid product with a “doctor recommended surfactant product.

OCuSOFT® Lid Scrub® Original Formula is principally a surfactant formulation and acts to remove oil, debris and desquamated skin in various eyelid conditions. OCuSOFT® Lid Scrub® PLUS contains a patented moisturizer and preservative blend that effectively eradicates seven different strains of bacteria commonly found on the eyelids without the need of prescription cleansers.

Regarding the effectiveness of OCuSOFT® Lid Scrub® PLUS, Marguerite McDonald, M.D. of Ophthalmic Consultants of Long Island and Clinical Professor of Ophthalmology, NYU School of Medicine, New York, US, goes on to say, “In a time-kill study, the anti-bacterial effectiveness of OCuSOFT® Lid Scrub® PLUS was independently tested against a variety of pathogens. In particular, S. epidermidis, a leading cause of post-operative endophthalmitis was tested.  These studies demonstrated a 5.5 log reduction confirming its significant effectiveness.”

It is interesting to note that debridement claims made by hypochlorous acid products are due to the spray projectile packaging of all hypochlorous acid products rather than strength of the concentration.  Significantly, none of the hypochlorous acid formulations on the market contain any surfactants to remove oil from the eyelids.  Most expert ophthalmologists and optometrists agree that the surfactant components of existing eyelid cleansers are necessary to remove excessive oil, debris and desquamated skin from the eyelids.  Since OCuSOFT® Lid Scrub® PLUS contains anti-bacterial properties, in cases of bacterial blepharitis treatment, this ONE product will effectively treat most patients.

Hypochlorous Acid for Severe Eyelid Treatment

The role of hypochlorous acid in eye care is not for continuous everyday eyelid cleansing, but instead used as an adjunct to OCuSOFT Lid Scrub cleansers in severe cases only.  Only in such severe cases might Hypochlorous acid (OCuSOFT® HypoChlor™) be beneficial.  In such cases, OCuSOFT suggests the use Combination Therapy including both a surfactant cleanser and Hypochlorous acid to achieve optimum results.  (It should be noted that such combination therapy is not necessary for the vast majority of patients.) OCuSOFT® HypoChlor™ Gel is ideal in these cases since it can be applied and left on overnight in order to expedite healing.

Price Tag and Degradation Rate

In order to receive a 510-K Medical Device clearance from the FDA, the product must demonstrate bioequivalence with the predicate devices.  All hypochlorous acid products that have received 510-K clearance and have identical bacterial kill rates using the USP51 test and identical principle compositions.  Again, from an earlier post:  ”…you wouldn’t be getting the efficacy of pure hypochlorous acid with its 14 years of product development, absence of sodium hypochlorite found in Chlorox bleach, and 3-year shelf life.” This is incorrect.  All hypochlorous acid products are manufactured similarly.  Chlorine in water splits into two forms, Hypochlorous Acid (HOCl) and Hypochlorite Ion (OCl-).  At the high pH the chlorine provided by bleach contains a maximum of Hypochlorite Ion. The chlorine produced by electrolyses or chemical reaction contains a maximum concentration of Hypochlorous Acid (HOCl).

How much of each is present in a chlorine solution is totally dependent upon the pH of the solution. As pH rises, less Hypochlorous Acid and more Hypochlorite Ion is in the solution. As the pH rises, less germ killing power is available.  The ideal pH of a disinfecting chlorine solution is a pH of 6-7 which is where most HOCl products range.

The shelf-life of NovaBay’s Avenova™ is 3 years, however, once the product is opened, its equilibrium shifts, chlorine gas is released and it degrades into saline after 30 days.  Therefore, one bottle of Avenova only lasts one month.  Compare this to OCuSOFT® HypoChlor™ that has an 18 month shelf-life and stability either opened or unopened.  Since we believe that OCuSOFT® HypoChlor™ should only be used as an adjunct to eyelid cleansers and for severe cases only, OCuSOFT® HypoChlor™’s 2oz. bottle could last a patient for 3-6 months.  Once the eyelid irritation is under control within the first 2 weeks of treatment with OCuSOFT® Lid Scrub® Plus and HypoChlor™, then the patient can switch to a low cost maintenance regimen of OCuSOFT® Lid Scrub® Original.

A minimum order of Avenova™ on-line through NovaBay’s website is 3 bottles at $30 each in 1.33 oz.  Annual treatment with Avenova™ would cost at least $360.  Compare this with the recommended therapy of OCuSOFT® HypoChlor™ ($21.95), OCuSOFT® Lid Scrub® PLUS® ($20) for the first two weeks of treatment, then OCuSOFT® Lid Scrub® Original monthly thereafter ($20 for a 90 day supply 7.25 oz. bottle) equals $121.00 per year.  This is a savings to the patient of 66% using the OCuSOFT preferred therapy.

In Summary

Doctors have long treated blepharitis and lid disease by recommending mild cleansers with surfactants (baby shampoo initially, then commercial lid cleansers such as OCuSOFT® Lid Scrub®) and prescribing antibiotics when necessary.  Although most antibiotic prescriptions will kill the primary bacterial flora found on the eyelid,  a surfactant cleanser  was, and still is, recommended first to debride the eyelid and remove excessive oil that harbor bacteria.

Synergy Begins a Relentless Climb May 18, 2015

 

Synergy May 18th 2015

As many of you are well aware, I’ve successfully predicted two 50% plus ascents in Synergy’s share price over the past 2 years.  I’m now predicting that beginning May 18th, Synergy’s share price will climb a similar amount and possibly higher over the coming 5 months.  Please note that I’m long Synergy Pharmaceuticals (SGYP).

Always be well…